<PAGE>
 
                                                                 Exhibit 10.18.1

                     THIRD AMENDMENT TO CREDIT AGREEMENT
                     ------------------------------------

        THIS THIRD AMENDMENT TO CREDIT AGREEMENT is made and dated as of June 7,
1995 (the "Amendment") among Community Psychiatric Centers, a Nevada corporation
("CPC"), Transitional Hospitals Corporation, a Delaware corporation ("THC"), and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a United States national
banking association ("Bank") and amends that certain Credit Agreement dated as
of May 6, 1994 and by a First Amendment to Credit Agreement dated as of December
14, 1994 and a Second Amendment to Credit Agreement dated as of February 28,
1995 (as so amended or modified from time to time, the "Credit Agreement").

                                    RECITAL
                                    -------

        The Company has requested, and the Bank has agreed, on the terms and 
conditions set forth herein, to amend the Credit Agreement.

        NOW, THEREFORE, for good and valuable consideration, the receipt and 
adequacy of which are hereby acknowledged, the parties hereby agree as follows:

        1. Terms.  All terms used herein shall have the same meanings as in the
Credit Agreement unless otherwise defined herein. All references to the Credit
Agreement shall mean the Credit Agreement as hereby amended.

        2. Amendment to Credit Agreement.

           2.1 Section 7.04(e) of the Credit Agreement is amended by deleting 
"$5,000,000" and inserting "$10,000,000" in lieu thereof.

        3. Representations and Warranties.  The Company represents and warrants 
to Bank that, on and as of the date hereof, and after giving effect to this 
Amendment:

           3.1 Authorization. The execution, delivery and performance of this 
Amendment have been duly authorized by all necessary corporate action by the 
Company and this Amendment has been duly executed and delivered by the Company.


                                     - 1 -
<PAGE>
 
           3.2 Binding Obligation. This Amendment is the legal, valid and 
binding obligation of the Company, enforceable against the Company in accordance
with its terms.
 
           3.3 No Legal Obstacle to Credit Agreement. The execution, delivery 
and performance of this Amendment will not (a) contravene the terms of the 
Company's certificate of incorporation, by-laws or other organization document; 
(b) conflict with or result in any breach or contravention of the provisions of 
any contract to which the Company is a party, or the violation of any law, 
judgment, decree or governmental order, rule or regulation applicable to the 
Company, or (c) result in the creation under any agreement or instrument of any 
security interest, lien, charge, or encumbrance upon any of the assets of the 
Company.  No approval or authorization of any governmental authority is required
to permit the execution, delivery or performance by the Company of this 
Amendment, or the transactions contemplated hereby.

           3.4 Incorporation of Certain Representations. The representations and
warranties of the Company set forth in Section 5 of the Credit Agreement are 
true and correct in all respects on and as of the date hereof as though made on 
and as of the date hereof.

           3.5 Default. No Default or Event of Default under the Credit 
Agreement has occurred and is continuing.

        4. Conditions, Effectiveness. The effectiveness of this Amendment shall 
be subject to the compliance by the Company with its agreements herein 
contained, and to the delivery of the following to the Bank in form and 
substance satisfactory to the Bank:

           4.1 Authorized Signatories. A certificate, signed by the Secretary or
an Assistant Secretary of the Company and dated the date of this Amendment, as 
to the incumbency of the person or persons authorized to execute and deliver 
this Amendment and any instrument or agreement required hereunder on behalf of 
the Company.

           4.2 Other Evidence. Such other evidence with respect to the Company 
or any other person as the Bank may reasonably request in connection with this 
Amendment and the compliance with the conditions set forth herein.

        5. Miscellaneous.

           5.1 Effectiveness of the Credit Agreement and the Loan Documents. 
Except as hereby expressly amended, the Credit Agreement and each other Loan 
Document shall each remain in full

                                     - 2 -

        
<PAGE>
 
force and effect, and are hereby ratified and confirmed in all respects on and
as of the date hereof.

           5.2 Waivers. This Amendment is limited solely to the matters 
expressly set forth herein and is specific in time and in intent and does not 
constitute, nor should it be construed as, a waiver or amendment of any other 
term or condition, right, power or privilege under the Credit Agreement, the 
Loan Documents, or under any agreement, contract, indenture, document or 
instrument mentioned therein; nor does it preclude or prejudice any rights of 
the Bank thereunder, or any exercise thereof or the exercise of any other right,
power or privilege, nor shall it require the Bank to agree to an amendment, 
waiver or consent for a similar transaction or on a future occasion, nor shall 
any future waiver of any right, power, privilege or default hereunder, or under 
any agreement, contract, indenture, document or instrument mentioned in the 
Credit Agreement, constitute a waiver of any other default of the same or of any
other term or provision.

           5.3 Counterparts. This Amendment may be executed in any number of 
counterparts and all of such counterparts taken together shall be deemed to 
constitute one and the same instrument. This Amendment shall not become 
effective until the Company and the Bank shall have signed a copy hereof, 
whether the same or counterparts, and the same shall have been delivered to the 
Bank.

           5.4 Jurisdiction. This Amendment shall be governed by and construed 
under the laws of the State of California.

        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be 
duly executed and delivered as of the date first written above.

                                        COMMUNITY PSYCHIATRIC CENTERS

                                        By:    /s/  Wendy Simpson
                                            ----------------------------
                                        Name:       WENDY SIMPSON
                                              --------------------------
                                        Title:  CHIEF FINANCIAL OFFICER
                                               -------------------------


                                        TRANSITIONAL HOSPITALS CORPORATION

                                        By:    /s/  Wendy Simpson
                                            ----------------------------
                                        Name:       WENDY SIMPSON
                                              --------------------------
(Signatures continue)                   Title:  CHIEF FINANCIAL OFFICER
                                               -------------------------

                                     - 3 -
<PAGE>
 
                                        BANK OF AMERICA NATIONAL TRUST AND
                                        SAVINGS ASSOCIATION

                                        By:    /s/  Wyatt Ritchie
                                            ----------------------------
                                                  Vice President

   

                             CONSENT OF GUARANTORS
                             ---------------------

The undersigned Guarantors hereby acknowledge that they have reviewed and
consent to the foregoing Third Amendment dated as of June 7, 1995 to Credit
Agreement dated as of May 6, 1994 and hereby reaffirm their respective General
Continuing General Guaranties, which continue in full force and effect on and as
of the date hereof.

Date: June 7, 1995

                                        EACH OF THE GUARANTORS LISTED ON
                                        ANNEX A HERETO, INCORPORATED BY
                                        REFERENCE HEREIN
        
                                        By:    /s/  Richard Conte
                                            ----------------------------
                                        Title:     CHAIRMAN AND CEO
                                               ------------------------- 

                                        By:    /s/ Wendy Simpson 
                                            ----------------------------
                                        Title:  CHIEF FINANCIAL OFFICER
                                               ------------------------- 

 
                           - 4 -                   
<PAGE>
 
                       COMMUNITY PSYCHIATRIC CENTERS AND
                           WHOLLY-OWNED SUBSIDIARIES

CORPORATION                                                DOMESTIC   FOREIGN
-----------                                                --------   -------

Community Psychiatric Centers                              NV         CA, NC
Belmedco                                                   CA
C.P.C. of Louisiana, Inc.                                  LA
CPC Investment Corp.                                       CA
CPC Laboratories, Inc.                                     GA
CPC Pharmacy, Inc.                                         CA
CPC Properties of Arkansas, Inc.                           AR
CPC Properties of Illinois, Inc.                           IL
CPC Properties of Indiana, Inc.                            IN
CPC Properties of Kansas, Inc.                             KS
CPC Properties of Louisiana, Inc.                          LA
CPC Properties of Mississippi, Inc.                        MS
CPC Properties of Missouri, Inc.                           MO
CPC Properties of North Carolina, Inc.                     NC
CPC Properties of Wisconsin, Inc.                          WI
CPC of Georgia, Inc.                                       GA
CalProp I, Inc.                                            DE
CalProp II, Inc.                                           DE
Community Psychiatric Centers 
 Properties Incorporated                                   CA         WA
Community Psychiatric Centers 
 Properties of Oklahoma, Inc.                              OK
Community Psychiatric Centers 
 Properties of Texas, Inc.                                 TX
Community Psychiatric Centers 
 Properties of Utah, Inc.                                  UT
Community Psychiatric Centers of 
 Arkansas, Inc.                                            AR
Community Psychiatric Centers of 
 California                                                CA         WA
Community Psychiatric Centers of 
 Florida, Inc.                                             FL         Virgin Isl
Community Psychiatric Centers of 
 Idaho, Inc.                                               ID
Community Psychiatric Centers of 
 Indiana, Inc.                                             IN
Community Psychiatric Centers of 
 Kansas, Inc.                                              KS
Community Psychiatric Centers of 
 Mississippi, Inc.                                         MS
Community Psychiatric Centers of 
 Missouri, Inc.                                            MO
Community Psychiatric Centers of 
 North Carolina, Inc.                                      NC
Community Psychiatric Centers of 
 Oklahoma, Inc.                                            OK
Community Psychiatric Centers of 
 Oregon, Inc.                                              OR

                            (Guaranty of THC Loans)

<PAGE>
 
Community Psychiatric Centers of 
 Puerto Rico, Inc.                                         NV         PR
Community Psychiatric Centers of 
 Texas, Inc.                                               TX
Community Psychiatric Centers of 
 Utah, Inc.                                                UT
Community Psychiatric Centers of 
 Wisconsin, Inc.                                           WI
Peachtree-Parkwood Hospital, Inc.                          GA
P.P.P., Inc.                                               GA
Psychiatric Hospitals Consultants                          CA         MO
Florida Hospital Properties, Inc.                          FL
Old Orchard Hospital, Inc.                                 IL
Cottonwood Hill, Inc.                                      CO
Counterpoint Center of Old Orchard, Inc.                   IL
Miami Valley Community Centers, Inc.                       OH
CPC Managed Health Care Services, Inc.                     DE         CA
Solutions Counseling & Treatment Center, Inc.              TX
Transitional Family Services of Georgia, Inc.              GA




THC - Chicago, Inc.                                        IL
THC - Hollywood, Inc.                                      FL
THC - Houston, Inc.                                        TX
Transitional Hospitals Corporation of 
 Indiana, Inc.                                             IN
Transitional Hospitals Corporation of 
 Louisiana, Inc.                                           LA
Transitional Hospitals Corporation of 
 Massachusetts, Inc.                                       MA
Transitional Hospitals Corporation of 
 New Mexico, Inc.                                          NM
THC - Minneapolis, Inc.                                    MN
Transitional Hospitals Corporation of 
 Nevada, Inc.                                              NV
Transitional Hospitals Corporation of 
 North Carolina, Inc.                                      NC
THC - Seattle, Inc.                                        WA
THC - St. Petersburg, Inc.                                 FL
Transitional Hospitals Corporation of 
 Tampa, Inc.                                               FL
Transitional Hospitals Corporation of 
 Texas, Inc.                                               TX
Transitional Hospitals Corporation of 
 Wisconsin, Inc.                                           WI
J.B. Thomas Hospital, Inc.                                 MA

4/94

<PAGE>
 
                       COMMUNITY PSYCHIATRIC CENTERS AND
                           WHOLLY-OWNED SUBSIDIARIES

CORPORATION                                                DOMESTIC   FOREIGN
-----------                                                --------   -------
Belmedco                                                   CA
C.P.C. of Louisiana, Inc.                                  LA
CPC Investment Corp.                                       CA
CPC Laboratories, Inc.                                     GA
CPC Pharmacy, Inc.                                         CA
CPC Properties of Arkansas, Inc.                           AR
CPC Properties of Illinois, Inc.                           IL
CPC Properties of Indiana, Inc.                            IN
CPC Properties of Kansas, Inc.                             KS
CPC Properties of Louisiana, Inc.                          LA
CPC Properties of Mississippi, Inc.                        MS
CPC Properties of Missouri, Inc.                           MO
CPC Properties of North Carolina, Inc.                     NC
CPC Properties of Wisconsin, Inc.                          WI
CPC of Georgia, Inc.                                       GA
CalProp I, Inc.                                            DE
CalProp II, Inc.                                           DE
Community Psychiatric Centers 
 Properties Incorporated                                   CA         WA
Community Psychiatric Centers 
 Properties of Oklahoma, Inc.                              OK
Community Psychiatric Centers 
 Properties of Texas, Inc.                                 TX
Community Psychiatric Centers 
 Properties of Utah, Inc.                                  UT
Community Psychiatric Centers of 
 Arkansas, Inc.                                            AR
Community Psychiatric Centers of 
 California                                                CA         WA
Community Psychiatric Centers of 
 Florida, Inc.                                             FL         Virgin Isl
Community Psychiatric Centers of 
 Idaho, Inc.                                               ID
Community Psychiatric Centers of 
 Indiana, Inc.                                             IN
Community Psychiatric Centers of 
 Kansas, Inc.                                              KS
Community Psychiatric Centers of 
 Mississippi, Inc.                                         MS
Community Psychiatric Centers of 
 Missouri, Inc.                                            MO
Community Psychiatric Centers of 
 North Carolina, Inc.                                      NC
Community Psychiatric Centers of 
 Oklahoma, Inc.                                            OK
Community Psychiatric Centers of 
 Oregon, Inc.                                              OR

                            (Guaranty of CPC Loans)
<PAGE>
 
Community Psychiatric Centers of 
 Puerto Rico, Inc.                                         NV         PR
Community Psychiatric Centers of 
 Texas, Inc.                                               TX
Community Psychiatric Centers of 
 Utah, Inc.                                                UT
Community Psychiatric Centers of 
 Wisconsin, Inc.                                           WI
Peachtree-Parkwood Hospital, Inc.                          GA
P.P.P., Inc.                                               GA
Psychiatric Hospitals Consultants                          CA         MO
Florida Hospital Properties, Inc.                          FL
Old Orchard Hospital, Inc.                                 IL
Cottonwood Hill, Inc.                                      CO
Counterpoint Center of Old Orchard, Inc.                   IL
Miami Valley Community Centers, Inc.                       OH
CPC Managed Care Health Services, Inc.                     DE         CA
Solutions Counseling & Treatment Center, Inc.              TX
Transitional Family Services of Georgia, Inc.              GA




Transitional Hospitals Corporation                         DE         GA, NM, FL

THC - Chicago, Inc.                                        IL
THC - Hollywood, Inc.                                      FL
THC - Houston, Inc.                                        TX
Transitional Hospitals Corporation of 
 Indiana, Inc.                                             IN
Transitional Hospitals Corporation of 
 Louisiana, Inc.                                           LA
Transitional Hospitals Corporation of 
 Massachusetts, Inc.                                       MA
Transitional Hospitals Corporation of 
 New Mexico, Inc.                                          NM
THC - Minneapolis, Inc.                                    MN
Transitional Hospitals Corporation of 
 Nevada, Inc.                                              NV
Transitional Hospitals Corporation of 
 North Carolina, Inc.                                      NC
THC - Seattle, Inc.                                        WA
THC - St. Petersburg, Inc.                                 FL
Transitional Hospitals Corporation of 
 Tampa, Inc.                                               FL
Transitional Hospitals Corporation of 
 Texas, Inc.                                               TX
Transitional Hospitals Corporation of 
 Wisconsin, Inc.                                           WI
J.B. Thomas Hospital, Inc.                                 MA

4/94